How much does old stock hurt you? Abe Sherman has a story to tell.
WHEN THE DIAMOND dealer’s son-in-law wanted to join the family business, he was told to go to the vault and bring back the box of unsorted large diamonds. ?I’ll teach you everything you need to know about the diamond business,? said the father-in-law. When the son-in-law returned, he was told to open the box and very carefully place each diamond on the wooden office chair.
Once all of the diamonds were laid out, the old man told his son-in-law to take off his pants.
?What?? the young man cried.
?Take off your pants? the old man insisted.
The son-in-law took off his pants and stood there, feeling ridiculous.
?Now take off your underwear,? his father-in-law ordered.
?Now wait a minute…,? the young man started to protest, but his father-in-law interrupted him.
?You want to learn the diamond business,? he asked.
The young man nodded.
?Then take off your underwear!?
The boy hesitated a minute then removed his underwear. ?Now, have a seat on the chair,? his father-in-law said.
As soon as the young man sat down, he leapt from the chair pulling diamonds from his backside. ?That hurt!? he shouted at his father-in-law. ?Why did you make me do that??
?You now know everything you need to know about the diamond business,? said the old man. ?Don’t sit on your inventory!?
If only all of us had a mentor who would do us the favor of teaching us such a memorable lesson. Over the past month, we visited several new Buyers Inter-national Group members ? all of whom had significant inventory over a year old, with the worst having held more than 70% of his inventory past the one-year mark.
The real pain begins when you can no longer pay your bills. A difficult cash flow can be as much of a pain in the butt as the one our poor son-in-law suffered, with one exception. At least in his case, he could pull out the diamonds and the pain stopped immediately. Undoing hundreds of thousands of dollars of inventory build-up takes months, if not years and I would encourage you to enlist the help of your staff.